Court File and Parties

Court File No.: CV-14-514915 Date: 2021-03-12 Ontario Superior Court of Justice

Re: Apotex Inc., Plaintiff -and- Pfizer Ireland Pharmaceuticals et al., Defendants

Before: F.L. Myers J.

Counsel: Orestes Pasparakis, Daniel Daniele, and Allyson Whyte Nowak for the defendants Andrew Brodkin, Nando De Luca, and Jerry Topolsky, for the plaintiff

Heard: March 4 and 9, 2021

Endorsement

[1] I am case managing this action. A 20-day non-jury trial is scheduled to commence on September 27, 2021.

[2] There are several similar actions before the court in various stages of case management. They all relate to claims brought by Apotex for losses it suffered by being delayed in coming to market with generic drugs due to efforts by the defendants and other drug manufacturers to assert invalid patents under the federal generic drug regulatory scheme.

[3] There are at least a couple of common issues in many of the actions including:

a. Does a pre-confederation statute of monopolies apply to allow claims for damages where a party asserts rights under a patent that is subsequently held to be invalid; and

b. Whether the federal regulatory scheme for compulsory licensing generic drugs is a complete code that precludes additional claims for losses suffered by a generic drug manufacturer who is delayed in bringing a generic drug to market where the patent of the originator is later held to be invalid.

[4] The defendants requested a case conference at which they asked the court to adjourn the trial to allow them to bring a summary judgment motion or, in the alternative, to wait for a decision by Schabas J. on a motion for summary judgment that was under reserve in a different case that deals with both of these issues.

[5] The plaintiff submits that to request the adjournment of the trial, the defendants are required to bring a full motion on evidence. In addition, they need leave to bring a motion under Rule 48.04(1) of the Rules of Civil Procedure because they consented to the trial date.

[6] The plaintiff points to three decisions in similar actions – two authored by me – refusing to schedule motions for summary judgment. In each case, the judges held that summary judgment would not have been a preferable, efficient, affordable alternative.

[7] While I had this matter under reserve, Schabas J. released his decision on the motion for summary judgment that he heard, Apotex Inc. v. Eli Lilly Canada Inc., 2021 ONSC 1588.

[8] In his decision, Schabas J. held that the facts needed to resolve the two legal questions before him were not in dispute. He distinguished the three other decisions that had refused to schedule motions for summary judgment and held that the legal issues before him were discrete, narrow, gating issues that he could resolve fairly and thereby save the parties the cost and delay of a trial.

[9] Schabas J. held, with support in precedents of the Divisional Court and the Court of Appeal, that the federal regulatory scheme is a complete code that prevents other claims for losses suffered under that process. Moreover, he held that even if the originator drug company was motivated by an improper motive, its actions in invoking the federal patent scheme would still not be actionable outside the scheme.

[10] On that basis, among others, Schabas J. dismissed Apotex’s claims under the Trademarks Act, and for unjust enrichment, common law nuisance, and conspiracy.

[11] In addition, he held that the pre-confederation statute relied upon by the plaintiff does not allow claims to be brought based on invalid patents.

[12] In this action, Apotex pleads that the defendants asserted a patent against them under the federal regulatory scheme and that the patent was subsequently held to be invalid. As in the case decided by Schabas J., Apotex pleads causes of action under the pre-confederation statute, the Trademarks Act, unjust enrichment, common law nuisance, and conspiracy. None is pleaded based on facts that are independent of the alleged misuse of the federal regulatory scheme by the defendants.

[13] I heard additional submissions from counsel on the effect of the decision of Justice Schabas on the issue before me.

[14] In Apotex Inc. v Merck & Co., Inc. et al, (unreported decision, August 31, 2016, Court File No. CV-12-454107), I held that it appeared to me that the facts in issue involving patent validity could not be resolved summarily at that time. However, at para. 8, I held:

Based solely on what I know today, reserving expressly the possibility for different outcomes based on further information at a later date, in my view the resolution of the difficult issues raised in these cases requires a trial.

[15] In Apotex Inc. v. Schering Corporation, 2019 ONSC 299 and Apotex Inc. v Eli Lilly and Company et al., (unreported decision, October 25, 2017, Court File No. CV-111-420115), Dunphy J. and I each refused to allow motions for partial summary judgment to be brought on pieces of the cases.

[16] None of these cases prevent or limit me for reconsidering the status of this action today.

[17] It seems to me that the concepts behind the doctrines of res judicata, issue estoppel, and abuse of process may be engaged here. If these issues of law have been conclusively decided against Apotex’s position, institutional concerns both as to legitimacy and resource allocation take on increased prominence.

[18] The Court of Appeal recently re-affirmed the importance of a court following the decisions of prior cases from its own court in Duggan v. Durham Region Non-Profit Housing Corporation, 2020 ONCA 788. At para. 63, Feldman JA wrote:

[63] The doctrine of stare decisis makes an important contribution to the cost-effective and efficient management of litigation by ensuring that a legal issue, including the interpretation of a legislative provision, regulation or rule, once decided, is not relitigated in the next case.

[19] The exceptions allow a court to depart from prior cases where a new legal issue is raised or “where there is a change in the circumstances or evidence that ‘fundamentally shifts the parameters of the debate’.” See: Duggan at para. 62.

[20] Mr. Brodkin submits that on the facts, the case before Schabas J. differed from this case. The patent before Schabas J. had been found to have been valid until the Supreme Court of Canada changed the law and made the patent invalid. There is no or little fault on the patent holder trying to enforce its patent which was valid under the prevailing law at the time. Here, the patent was found to have been invalid on a normal patent law basis. Pfizer failed to adequately disclose its invention and the Supreme Court of Canada likened the situation to someone “gaming the system”.

[21] I am not deciding the case today. But I am dubious that this is a distinction that makes any difference. First, Schabas J. found expressly that his ruling did not turn on the motive of the patent holder. Moreover, the validity of Pfizer’s patent had been upheld all the way up to the Supreme Court of Canada too. Although the Pfizer case may not have signalled a major doctrinal shift in the law, both lower courts had upheld the patent until the SCC held it to violate the statute. That must have been a change in the law as seen by the two lower courts.

[22] This is the normal stuff of the law. One challenges a patent and can lose and lose on appeal and then finally win in the SCC. I cannot see that parsing the degree to which the SCC changed the law in invalidating a particular patent could make a difference to the interpretation of whether the generic drug compulsory licensing regulations are a complete code or to the interpretation of the pre-confederation statute.

[23] Finally, and perhaps most significant, I asked Mr. Brodkin whether the factual distinction that he was making could be ascertained simply by reading the relevant SCC decisions. He agreed that this was likely the case. So, the factual issue that could arise, is not one that is likely to prevent summary resolution.

[24] Mr. Pasparakis expressly submitted that if the case is resolved summarily on the foregoing bases, there would be major trial savings as it would no longer be necessary for Pfizer to mount defences based on the validity of a different patent that they assert and major accounting issues associated with proof of damages. I take this to mean that the counterclaim will be withdrawn if summary judgment is granted dismissing the claim. If that is not correct and a trial is still required on the counterclaim, counsel are to advise me forthwith.

[25] I am satisfied that in light of the decision by Schabas J. a motion for summary judgment could very well resolve this case much more quickly and cheaply than a 20-day trial. Depending on the outcome, this case might be available to the Court of Appeal with Justice Schabas’s case. Inviting a 20-day trial to re-visit questions of law already decided against the plaintiff by this court does not strike me as apt based on the foregoing doctrinal, resource allocation, efficiency, and affordability concerns.

[26] I am not finding that there is no serious issue requiring a trial. But I am four years further along in understanding these cases. Earlier submissions of great factual complexity seem to have been overstated or simply resolved with time. I have much less concern today about the risk of facts overwhelming the judge’s ability to resolve the issues summarily. But that will be for the judge who hears the motion to decide.

[27] I note that after the Supreme Court of Canada found Pfizer’s patent violated the statute, Apotex moved to replace the 20-day trial that was scheduled to commence in a few short days with a motion for summary judgment. [1] Zinn J. granted judgment as asked and the trial was avoided.

[28] While a decision by a judge of this court may not have the binding force of a decision by the Supreme Court of Canada, the point however, is that circumstances can change before a scheduled trial. In that case, even if the SCC decision did not formally invalidate the patent, it decided the factual and legal issues in the action that would determine its formal validity. Here, Apotex might be disabled from re-litigating the findings made by Schabas J. But, in any event, the legal holdings made by Schabas J. have to be followed unless they can be distinguished or there is a fundamental change in the parameters of the debate.

[29] Mr. Brodkin argues that the order setting the trial date was a consent order. There is no basis to vary it under Rule 59.06 of the Rules of Civil Procedure. He says that they have scheduled experts and other trials around the current trial date. I am sure that is all true as it was when Zinn J. resolved the case summarily with a trial set to go the next week.

[30] Would I not be allowing the summary judgment motion to proceed, I would stay this action under s. 106 of the Court of Justice Act. There are numerous actions all waiting for the same findings of law. No matter what the outcome at the Court of Appeal, much time and money will be saved by waiting. If the decision of Schabas J. is upheld as one of pure legal analysis, then a trial is probably unnecessary. If the Court of Appeal identifies facts that may impact the outcome on a case-by-case basis, the trial can be focussed on the relevant facts rather than the kitchen sink approach of all the parties in all of these actions.

[31] There is no urgency here. This is one of a large number of a cases among generic drug manufacturers and the originator drug companies that is its own cottage industry in legal Canada. Nothing turns on this case proceeding in the fall except scheduling issues for participants. That is not a reason to hold an otherwise possibly unnecessary 20-day trial.

[32] Finally, I disagree with Mr. Brodkin’s submission that there needs to be a formal motion under Rule 48.04, Rule 59.06 and consent orders etc. I expect that both parties would be more than happy to start down another motion path.

[33] One of the purposes of case management under Rule 77 and the breadth of Rule 50.13(6) is to prevent parties from taking technical positions that may have all kinds of good tactical reasons but which do not advance the resolution of the merits, are unhelpful, costly for the parties, or a waste of judicial resources.

[34] Pfizer’s counsel gave clear notice to Apotex’s counsel that the purpose of the case conference was for Pfizer to propose to proceed with the case summarily. Counsel came to the case conference prepared to argue and made the proper and fair points. I accept Mr. Brodkin’s concerns about the inconvenience of the change in scheduling. I see no benefit in receiving evidence on this unchallenged point.

[35] Trial dates are adjourned at pretrial conferences and case conferences every week in Toronto. Moreover, the court can amend any date (Rule 3.02(1)) and waive compliance with any rule in the interests of justice (Rule 2.03). It was fair and reasonable to resolve this matter summarily at a case conference under Rule 50.13(6).

[36] The trial date scheduled for September 27, 2021 is vacated. The parties are to agree on a schedule for a motion for summary judgment to be brought by the defendants to be heard before the end of the summer. If they cannot agree within one week, I may be contacted to assist them with scheduling.

F.L. Myers J. Date: March 12, 2021

[1] There was a very technical issue about the proper scope and effect of the decision of the Supreme Court of Canada due to the particular procedural route by which the decision made its way to that court. Accordingly, Apotex still needed a judgment of the Federal Court to formally invalidate the patent. Zinn J. agreed.